Governance SPICE. Using COSO and COBIT Process Assessment Models BPM GOSPEL

Transcription

1 Governance SPICE Using COSO and COBIT Process Assessment Models Linking Governance to Sustainable Value Creation BPM GOSPEL (LLP-LDV-TOI-2010-HU-001) This project has been funded with support from the European Commission. This publication reflects the views only of the authors, and the Commission cannot be held responsible for any use which may be made of the information contained therein. János Ivanyos Memolux Ltd. Dr. József Roóz Budapest Business School

2 Topics Governance SPICE ( ) COBIT/COSO Performance Measurement Governance Capability - Mapping COSO Objectives with ISO/IEC Capability Levels COSO & COBIT as Process Reference Models Linking Governance to Sustainable Value Creation Governance Model for Trusted Businesses Multi-layer business assurance technology Developing case studies for learning and coaching SPICE Assessors Workshop Community at the 18th EuroSPI Conference, Roskilde University, Denmark, June

3 Governance SPICE ( ) Refers to Governance, Risk and Controls (OECD Principles, Regulations, Audit Standards) based on different concepts (IA-Manager ) Recognized Control Frameworks (COSO&COBIT) Risk Tolerance and Risk Appetite (COSO ERM) Performance Measurement (COBIT) Process Capability Assessment (ISO/IEC ) Evaluating Process-related Risk (ISO/IEC ) Organizational Maturity (ISO/IEC TR ) by using multilingual ontology (MONTIFIC ) Terminology database Ontology model to leverage sustainable value creation (GOSPEL ) Governance Model for Trusted Businesses Multi-layer business assurance technology SPICE Assessors Workshop Community at the 18th EuroSPI Conference, Roskilde University, Denmark, June

4 Validation of Governance SPICE Competencies Governance, Risk and Controls SPICE Audit SPICE Assessors Workshop Community at the 18th EuroSPI Conference, Roskilde University, Denmark, June

5 Using COSO & COBIT Process Assessment Models Measurement Framework COSO Objective Categories COBIT Performance Drivers Risk Tolerance Risk Appetite Strategic high-level goals, aligned with and supporting entity s mission Operations effective and efficient use of entity s resources Reporting reliability of reporting Compliance compliance with applicable laws and regulations COSO 20 Control Processes Strategic Goals drivenby the outcome measures of Established IT processes Effective and efficient business operation driven by the outcome measures of Managed IT Processes Reliable IT operation driven by the outcomemeasures of Performed IT Processes IT Goals driven by the outcome measures of IT Activities COBIT 34 ITGC Processes GOVERNANCE SPICE Business Processes Financial Reporting Activities Business Process Models SPICE Assessors Workshop Community at the 18th EuroSPI Conference, Roskilde University, Denmark, June

6 Business goals Maintain enterprise reputation and leadership Number of incidents causing public embarrassment COBIT IT goals Ensure that IT services can resist and recover from attacks Number of actual IT incidents with business impact driven by Process goals Activity goals focusing on achieved by Understand security requirements, vulnerabilities and threats Detect and resolve unauthorised access Frequency of review of the type of security events to be monitored driven by Number of actual incidents because of unauthorised access driven by COBIT Performance Measurement 6

7 Evidencies Focusing on Objectives categories Assessments Effectiveness goals Strategic COSO Objectives Metrics Efficiency goals Organizational levels Policies Standardization goals Operations Procedures Deployment goals Workprograms Workproducts Management goals Documentation goals Reporting Operational levels Operational levels Activities Process goals Compliance 7

8 Evidencies Focusing on Objectives categories Assessments Effectiveness goals Strategic COSO Objectives Metrics Efficiency goals Organizational levels Policies Standardization goals Procedures Deployment goals Operations Outcome measures Workprograms Management goals Reporting Operational levels Workproducts Documentation goals Operational levels Activities Process goals Compliance 8

9 Evidencies Focusing on Objectives categories Assessments Effectiveness goals Strategic COSO Objectives Metrics Efficiency goals Organizational levels Policies Standardization goals Procedures Deployment goals Operations Performance drivers Workprograms Management goals Reporting Operational levels Workproducts Documentation goals Operational levels Activities Process goals Compliance 9

10 Strategic COSO OBJECTIVES high-level goals, aligned with and supporting entity s mission processes consistently enactedwithin defined limits COSO ERM Internal Control define driven by Operations effective and efficient use of entity s resources defined processes used based on standard process Level 3 Established are based on reliable Reporting are achieved by performing Compliance compliance with applicable laws and regulations reliability of reporting implemented processes achieving process purpose driven by mananged managed processeswith established, controlled and maintained work products Level1 Performed driven by Level 2 Managed ISO/IEC CAPABILITY LEVELS 10

11 ISO/IEC Capability Levels The process is continuously improved to meet relevant current and projected business goals. Level 5 Optimizing process PA 5.1 Process Innovation PA 5.2 Process Optimization The process is enacted consistently within defined limits. Level 4 Predictable process PA 4.1 Process Measurement PA 4.2 Process Control A defined process is used based on a standard process. Level 3 Established process PA 3.1 Process Definition PA 3.2 Process Deployment Level 2 Managed process PA 2.1 Performance Management PA 2.2 Work Product Management The process is managed and work products are established, controlled and maintained. Level 1 Performed process PA 1.1 Process Performance The process is implemented and achieves its process purpose. Level 0 Incomplete process The process is not implemented or fails to achieve its purpose. SPICE Assessors Workshop Community at the 18th EuroSPI Conference, Roskilde University, Denmark, June

12 ISO/IEC Capability Levels and COSO The process is continuously improved to meet relevant current and projected business goals. Level 5 Optimizing process PA 5.1 Process Innovation PA 5.2 Process Optimization STRATEGIC The process is enacted consistently within defined limits. Level 4 Predictable process PA 4.1 Process Measurement PA 4.2 Process Control COSO A defined process is used based on a standard process. RELIABLE REPORTING Level 3 Established process PA 3.1 Process Definition PA 3.2 Process Deployment Level 2 Managed process PA 2.1 Performance Management PA 2.2 Work Product Management OPERATIONS The process is managed and work products are established, controlled and maintained. Level 1 Performed process PA 1.1 Process Performance The process is implemented and achieves its process purpose. COMPLIANCE Level 0 Incomplete process The process is not implemented or fails to achieve its purpose. SPICE Assessors Workshop Community at the 18th EuroSPI Conference, Roskilde University, Denmark, June

13 ISO/IEC Capability Levels and COBIT The process is continuously improved to meet relevant current and projected business goals. Level 5 Optimizing process PA 5.1 Process Innovation PA 5.2 Process Optimization STRATEGIC GOALS The process is enacted consistently within defined limits. Level 4 Predictable process PA 4.1 Process Measurement PA 4.2 Process Control COBIT A defined process is used based on a standard process. RELIABILITY GOALS Level 3 Established process PA 3.1 Process Definition PA 3.2 Process Deployment Level 2 Managed process PA 2.1 Performance Management PA 2.2 Work Product Management BUSINESS GOALS The process is managed and work products are established, controlled and maintained. Level 1 Performed process PA 1.1 Process Performance The process is implemented and achieves its process purpose. IT GOALS Level 0 Incomplete process The process is not implemented or fails to achieve its purpose. SPICE Assessors Workshop Community at the 18th EuroSPI Conference, Roskilde University, Denmark, June

14 Mapping Objectives Outcome Measures with Capability Levels Level 4 Predictable process PA 4.1 Process Measurement PA 4.2 Process Control Level 3 Established process PA 3.1 Process Definition PA 3.2 Process Deployment Level 2 Managed process PA 2.1 Performance Management PA 2.2 Work Product Management Level 1 Performed process PA 1.1 Process Performance SPICE Assessors Workshop Community at the 18th EuroSPI Conference, Roskilde University, Denmark, June

15 Terminology Mapping ISO/IEC COSO COBIT Process Category Component Domain Process Principle Process Process Name Principle name Process name Process Purpose Principle description IT goal Process Outcome Attribute Activity goal Base Practice Approach Control Objective Work Product - Input/Output SPICE Assessors Workshop Community at the 18th EuroSPI Conference, Roskilde University, Denmark, June

16 COBIT processes Plan and Organize (PO) PO1 Define a Strategic IT Plan PO2 Define the Information Architecture PO3 Determine Technological Direction PO4 Define the IT Processes, Organisation and Relationships PO5 Manage the IT Investment PO6 Communicate Management Aims and Direction PO7 Manage IT Human Resources PO8 Manage Quality PO9 Assess and Manage IT Risks PO10 Manage Projects Acquire and Implement (AI) AI1 Identify Automated Solutions AI2 Acquire and Maintain Application Software AI3 Acquire and Maintain Technology Infrastructure AI4 Enable Operation and Use AI5 Procure IT Resources AI6 Manage Changes AI7 Install and Accredit Solutions and Changes Deliver and Support (DS) DS1 Define and Manage Service Levels DS2 Manage Third-party Services DS3 Manage Performance and Capacity DS4 Ensure Continuous Service DS5 Ensure Systems Security DS6 Identify and Allocate Costs DS7 Educate and Train Users DS8 Manage Service Desk and Incidents DS9 Manage the Configuration DS10 Manage Problems DS11 Manage Data DS12 Manage the Physical Environment DS13 Manage Operations COSO processes Control Environment (CE) Integrity and Ethical Values (IEV) Oversight Board (OB) Management s Philosophy and Operating Style (MPO) Organizational Structure (OS) Financial Reporting Competencies (FRC) Authority and Responsibility (AR) Human Resources (HR) Risk Assessment (RA) Financial Reporting Objectives (FRO) Financial Reporting Risks (FRR) Fraud Risk (FR) Control Activities (CA) Integration with Risk Assessment (IRA) Selection and Development of Control Activities (SD) Policies and Procedures (PD) Information Technology (IT) Information and Communication (IC) Financial Reporting Information (FRI) Internal Control Information (ICI) Internal Communication (IC) External Communication (EC) Monitoring (MO) Ongoing and Separate Evaluations (OSE) Reporting Deficiencies (RD) Monitor and Evaluate (MO) ME1 Monitor and Evaluate IT Performance ME2 Monitor and Evaluate Internal Control ME3 Ensure Compliance With External Requirements ME4 Provide IT Governance 16

17 COSO-based Process Assessment Model SPICE Assessors Workshop Community at the 18th EuroSPI Conference, Roskilde University, Denmark, June

18 ISO/IEC conform process definition of a COSO Principle Process ID IFC.CE.IEV Process Name Integrity and Ethical Values Process Purpose Sound integrity and ethical values, particularly of top management, are developed and understood and set the standard of conduct for financial reporting. Process As a result of successful implementation of IFC.CE.IEV process: Outcomes 1) Values articulated Top management develops a clearly articulated statement of ethical values that is understood at all levels of the organization. 2) Adherence monitored Processes are in place to monitor adherence to principles of sound integrity and ethical values. 3) Deviation addressed Deviations from sound integrity and ethical values are identified in a timely manner and appropriately addressed and remedied at appropriate levels within the organisation. SPICE Assessors Workshop Community at the 18th EuroSPI Conference, Roskilde University, Denmark, June

19 ISO/IEC conform base practice descriptions from COSO SPICE Assessors Workshop Community at the 18th EuroSPI Conference, Roskilde University, Denmark, June

20 ISO/IEC conform definition of a COBIT process Control over the IT process of Define a strategic IT plan that satisfies the business requirement for IT of by focusing on is achieved by Process sustaining or extending the business strategy and governance requirements whilst being transparent about benefits, costs and risks incorporating IT and business management in the translation of business requirements into service offerings, and the development of strategies to deliver these services in a transparent and effective manner Engaging with business and senior management in aligning IT strategic planning with current and future business needs Understanding current IT capabilities Providing for a prioritisation scheme for the business that quantifies the business requirements Purpose Related Practices Outcomes and is measured by Percent of IT in the IT strategic plan that support the strategic business plan Percent of IT projects in the IT project portfolio that can be directly traced back to the IT tactical plans Delay between updates of IT strategic plan and updates of IT tactical plans SPICE Assessors Workshop Community at the 18th EuroSPI Conference, Roskilde University, Denmark, June

21 COBIT PAM (Exposure Draft 12 Apr 2011) SPICE Assessors Workshop Community at the 18th EuroSPI Conference, Roskilde University, Denmark, June

22 Linking Governance to Sustainable Value Creation??? SPICE Assessors Workshop Community at the 18th EuroSPI Conference, Roskilde University, Denmark, June

23 Setting Governance Objectives Supporting Organization s Internal Control System Risk Awareness Accountability Competency Accuracy Process Integrity Data Protection Commitment Control Efficiency Supporting Business Sustainability Competitiveness Exploitability Satisfaction SPICE Assessors Workshop Community at the 18th EuroSPI Conference, Roskilde University, Denmark, June

24 Determining Application Process for a Governance Objective (Accuracy) Governance Objective Key Risk Risk Factors Responses Applicable COSO&COBIT processes Application Practices Information architecture is inconsistent with processing requirements Maintaining effective information architecture and data model Define the Information Architecture (COBIT) Satisfy the business requirement of being agile in responding to requirements; provide reliable, consistent information, and seamlessly integrate applications into business processes. 4. Accuracy / Information Reliability Ensured Inconsistency in data architecture and disclosure elements Non-compliance with rules and regulations are not detected in time Availability and quality of control information are not sufficient Information is systematically collected and assessed to detect compliance issues, privacy problems and fraud Control information for automated process settings, data manipulations and calculations are maintained systematically Financial Reporting Information (COSO) Internal Control Information (COSO) Pertinent information is identified, captured, used at all levels of the organisation, and distributed in a form and timeframe that supports the achievement of the organization s financial reporting and trusted business. Information used to execute other control components is identified, captured, and distributed in a form and timeframe that enables personnel to carry out their internal control responsibilities. SPICE Assessors Workshop Community at the 18th EuroSPI Conference, Roskilde University, Denmark, June

25 Information Reliability Governance Process (Accuracy Objective) Process ID Process Name Process Purpose Process Outcomes GOV.IR Information Reliability The purpose of the Information Reliability process is to ensure the accuracy and consistency in data architecture and disclosure elements relevant for financial reporting and trusted business, and for supporting data processing integrity. NOTE1: The Information Reliability process is a special application of the COSO 2006 and COBIT 4.1 models in the context of the Accuracy governance objective. Thus this process is denoted an Application Area. The practices, called application practices, are implemented using selected processes based on the COSO 2006 principles and the COBIT 4.1 framework in the context of this special application. This facilitates the re-use of the elements of the COSO 2006 and COBIT 4.1 based reference models without recreating processes that are already well established. NOTE2: The descriptions of the COBIT 4.1 processes and the COSO 2006 Principles are applicable to define ISO/IEC conformant process reference models and process performance indicators for assessing process capability according to the ISO/IEC standard. As a result of successful implementation of the Information Reliability process the following service governance are achieved: 1) Effective information architecture and data model are maintained. 2) Information is systematically collected and assessed to detect compliance issues, privacy problems and fraud. 3) Control information for automated process settings, data manipulations and calculations are maintained systematically. SPICE Assessors Workshop Community at the 18th EuroSPI Conference, Roskilde University, Denmark, June

26 Using Define the Information Architecture COBIT Process as an Application Practice Application practice AP01 Ensure the integrity and consistency of all data stored in electronic form. Satisfy the business requirement of being agile in responding to requirements; provide reliable, consistent information, and seamlessly integrate applications into business processes. [Outcome: 1] NOTE1: This practice is implemented by performing practices (control ) of the COBIT 4.1 Define the Information Architecture process with a specific focus on how governance supports internal control over financial reporting and business operation: PO2.1 Create and maintain enterprise information model. Establish and maintain an enterprise information model to enable applications development and decision-supporting activities, consistent with IT plans. The model should facilitate the optimal creation, use and sharing of information by the business in a way that maintains integrity and is flexible, functional, cost-effective, timely, secure and resilient to failure. PO2.2 Create and maintain enterprise data dictionary (ies). Maintain an enterprise data dictionary that incorporates the organisation s data syntax rules. This dictionary should enable the sharing of data elements amongst applications and systems, promote a common understanding of data amongst IT and business users, and prevent incompatible data elements from being created. PO2.3 Establish and maintain data classification scheme. Establish a classification scheme that applies throughout the enterprise, based on the criticality and sensitivity (e.g., public, confidential, top secret) of enterprise data. This scheme should include details about data ownership; definition of appropriate security levels and protection controls; and a brief description of data retention and destruction requirements, criticality and sensitivity. It should be used as the basis for applying controls such as access controls, archiving or encryption. PO2.4 Manage data integrity. Define and implement procedures to ensure the integrity and consistency of all data stored in electronic form, such as databases, data warehouses and data archives. SPICE Assessors Workshop Community at the 18th EuroSPI Conference, Roskilde University, Denmark, June

27 Information Reliability - Governance Process using COSO&COBIT Relationship Notes Sources The relationships between the Information Reliability process and application practices, and other processes in COSO 2006 and COBIT 4.1 models, have been noted for each practice above. This innovative concept of including Application Areas in a process assessment model instantiates the idea of using already established processes with respect to a particular application. (Like in Enterprise SPICE) COBIT 4.1: PO2 Define the Information Architecture COSO 2006: IFC.IC.FRI Financial Reporting Information, IFC.IC.ICI Internal Control Information References Control Objectives for Information and related Technology - COBIT 4.1 Copyright 2007 by the IT Governance Institute Algonquin Road, Suite 1010 Rolling Meadows, IL USA. All rights reserved. Internal Control over Financial Reporting Guidance for Smaller Public Companies Copyright 2006 by The Committee of Sponsoring Organization, C/O AICPA, Harborside Financial Center, 201 Plaza Three, Jersey City, NJ , USA. All rights reserved. SPICE Assessors Workshop Community at the 18th EuroSPI Conference, Roskilde University, Denmark, June

28 BPM GOSPEL: Multi-layer business assurance technology Concept of 4 layers in BPM GOSPEL: Transaction Processing Memolux Payroll system Workflow/Control Management ADAMAS by GEMMA Ltd. Compliance/Audit Management Stages Governance Edition by Method Park AG Certification Capability Advisor by ISCN SPICE Assessors Workshop Community at the 18th EuroSPI Conference, Roskilde University, Denmark, June

29 Using Stages Governance Edition for Compliance/Audit Management SPICE Assessors Workshop Community at the 18th EuroSPI Conference, Roskilde University, Denmark, June

30 BPM GOSPEL Case Studies (by end of 2011) Different approaches for demonstrating added business value are considered per industry needs mapping them to Governance, for example: Memolux payroll SOC1&SOC2 Gemma ESF grant management Method Park - Business SPICE for big company BBS - Short Cycle Higher Education ISCN - ECQA Job-role Committee management per (set of) governance Top five based on presentable added values Participation interest from workshop community is welcome! SPICE Assessors Workshop Community at the 18th EuroSPI Conference, Roskilde University, Denmark, June

31 Topics covered Governance SPICE ( ) COBIT/COSO Performance Measurement Governance Capability - Mapping COSO Objectives with ISO/IEC Capability Levels COSO & COBIT as Process Reference Models Linking Governance to Sustainable Value Creation Governance Model for Trusted Businesses Multi-layer business assurance technology Developing case studies for learning and coaching More information: Thank you for your attention! SPICE Assessors Workshop Community at the 18th EuroSPI Conference, Roskilde University, Denmark, June